-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, cDHgJPn7VIE98EnpPnl75ji5QZRCXrphq3MXC7KQaUroSj8bM6vRsCUqkcRL8md0 9o/NhGDghOHoqxSBMEvZxg== 0000896058-94-000059.txt : 19940620 0000896058-94-000059.hdr.sgml : 19940620 ACCESSION NUMBER: 0000896058-94-000059 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19940617 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN INDIANA GAS & ELECTRIC CO CENTRAL INDEX KEY: 0000092195 STANDARD INDUSTRIAL CLASSIFICATION: 4931 IRS NUMBER: 350672570 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1/A SEC ACT: 1935 Act SEC FILE NUMBER: 070-08407 FILM NUMBER: 94534806 BUSINESS ADDRESS: STREET 1: 20 NW FOURTH ST CITY: EVANSVILLE STATE: IN ZIP: 47741-0001 BUSINESS PHONE: 8124655300 U-1/A 1 As filed with the Securities and Exchange Commission on June 17, 1994. File No. 70-08470 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 1 TO FORM U-1 APPLICATION/DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 SOUTHERN INDIANA GAS AND ELECTRIC COMPANY 20 N.W. Fourth Street Evansville, Indiana 47741-0001 - ---------------------------------------------------------------------------- (Name of company filing this statement and address of principal executive office) SOUTHERN INDIANA GAS AND ELECTRIC COMPANY - ---------------------------------------------------------------------------- (Name of top registered (exempt) holding company parent of applicant or declarant) A.E. GOEBEL 20 N.W. Fourth Street Evansville, Indiana 47741-0001 - ---------------------------------------------------------------------------- (Name and address of agent for service) Copies to: John W. Byington, Jr., Esq. Winthrop, Stimson, Putnam & Roberts One Battery Park Plaza New York, New York 10004-1490 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 1 TO FORM U-1 APPLICATION/DECLARATION WITH RESPECT TO ACQUISITION OF INTERESTS IN NON-AFFILIATED UTILITY COMPANY UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 INTRODUCTION ------------ Southern Indiana Gas and Electric Company ("SIGECO"), is filing this Amendment No. 1 to the Form U-1 Application/Declaration (the "Application") under the Public Utility Holding Company Act of 1935 (the "Act") filed with the Securities and Exchange Commission (the "Commission") on April 4, 1994, for the purpose of providing additional information. I. Item 2(a) of the original Application is hereby amended and restated in its entirety as follows: Item 2. FEES, COMMISSIONS AND EXPENSES (a) Pursuant to the Agreement, SIGECO and Lincoln have each agreed that each party will pay all costs and expenses incurred by it in connection with the proposed transaction whether or not consummated. The fees and expenses to be paid or incurred by SIGECO and/or Lincoln in connection with the proposed transactions, including the Merger, this Application under the Act, the IURC Petition and other related matters, are estimated to be as follows: Form U-1 Filing Fee (Actual) . . . . . $ 2,000 Legal Fees relating to IURC Petition - Bamberger, Foreman, Oswald and Hahn . . . . . . . . . . . . . . 5,000 Legal Fees (other than those relating to IURC Petition) - Winthrop, Stimson, Putnam & Roberts . . . . . . . . . . 170,000 Accountants' Fees (Actual) - Arthur Andersen & Co. . . . . . . . . 11,480 Miscellaneous . . . . . . . . . . . . . $ 5,520 ------- Total . . . . . . . . . . . $194,000 -------- II. Item 3.B.2 of the original Application is hereby amended and restated in its entirety as follows: Item 3. APPLICABLE STATUTORY PROVISIONS * * * B. Section 10(c) Analysis * * * 2. Section 10(c)(2) * * * a. Economics and Efficiencies The acquisition will tend toward certain economies and efficiencies, affording Lincoln access to developing gas-related technologies and purchasing opportunities that, without the acquisition, Lincoln would not have the financial ability to access. Moreover, while Lincoln's increased strength as a result of the acquisition will allow Lincoln to enhance its implementation of conservation programs and to more readily comply with new and existing environmental standards, the acquisition will similarly allow Lincoln to expand its operations and allow SIGECO to expand its investment in the retail gas business. Although Lincoln will be a separate wholly-owned subsidiary of SIGECO, the companies will be operated as an integrated public-utility system. After the acquisition, SIGECO will make gas-supply purchases for both companies. Lincoln currently pays a broker's commission of $.05 per Dth of gas purchased which will be eliminated. This is expected to result in a savings of approximately $28,000 per year. Other aspects of the Lincoln system will be operated by SIGECO pursuant to service agreements (i.e., legal, financial, accounting, engineering, maintenance and other services). Savings estimated at $3,000 annually are expected to flow from the fact that all of Lincoln's gas customers are also SIGECO electric customers and therefore are already on SIGECO's computerized billing system. Although SIGECO has agreed with Lincoln that it will not terminate the employment of any of the approximately nine full-time and part-time employees of Lincoln upon consummation of the Merger, it does expect to eventually save most or all of the approximately $325,000 spent by Lincoln annually on salary and benefits by integrating those employees into the operation of an integrated SIGECO/Lincoln system. As SIGECO's existing work force is reduced through normal attrition, these Lincoln employees will be available to SIGECO to replace its lost workers without additional cost. Likewise, existing SIGECO employees will be available to fill reductions in staffing at Lincoln, if any, due to normal attrition. In fact, not only will SIGECO and Lincoln avoid the additional expenditures of recruiting, training and paying new hires in the near future, but they will also realize the benefits associated with the elimination of employee duplication of tasks and responsibilities. Lincoln's office is in a building which it owns in Rockport, Indiana and SIGECO's district office is in a SIGECO-owned building about a block away. One or the other of these buildings can be sold. In addition to the cash received from the sale of the building, the resulting elimination of overhead and operating costs for the building sold is expected to produce savings of approximately $4,000 to $5,000 annually. An additional area in which an integrated SIGECO/Lincoln system will realize savings is in the costs related to the preparation and review of its financial accounts. SIGECO's current independent accountants, Arthur Andersen & Co., will assume responsibility for Lincoln's books with little or no additional expense to SIGECO. Lincoln has been paying $5,000 annually for such services. Beyond the actual dollars saved as a result of the Merger, SIGECO views the resulting integrated system as one of great strategic value. The acquisition of Lincoln will give SIGECO entry into a service area which is ripe for industrial development. SIGECO, with its size and expertise, will be in a much better position to take advantage of this anticipated development than it otherwise would without Lincoln's service area, or, moreover, than Lincoln otherwise would were it to remain independent. The above-described benefits are those that will immediately inure to the companies as a result of the acquisition. The benefits associated with the integrated system that will be created by the acquisition, however, go further. The ability of Lincoln to access the SIGECO system should result in what are not quantifiable cost savings. A substantial part of these cost savings will inure to the benefit of ratepayers of both companies. Moreover, the addition of the Lincoln service territory to the SIGECO system may increase the value of SIGECO Common Stock and thus benefit SIGECO's shareholders. In light of these cost savings and various efficiencies, the requirements of the economical and efficient development of an integrated utility system of Section 10(c)(2) of the Act will clearly be met. III. Item 4(b) of the original Application is hereby amended and restated in its entirety as follows: Item 4. REGULATORY APPROVAL * * * (b) On December 27, 1993, SIGECO and Lincoln filed a joint petition with the IURC for authority to consummate the transaction. (See Exhibit D-1 previously filed.) On May 18, 1994, the IURC issued its Order approving the transaction. (See Exhibit D-2 filed herewith.) IV. Item 6 of the original Application is hereby amended and restated in its entirety as follows: Item 6. EXHIBITS AND FINANCIAL STATEMENTS The following exhibits and financial statements are filed as a part of this Application: (a) Exhibits A-1* Amended Articles of Incorporation of SIGECO, as amended March 26, 1985. (Physically filed and designated in Form 10-K for the fiscal year 1985, File No. 1-3553, as Exhibit 3-A.) Articles of Amendment of the Amended Articles of Incorporation of SIGECO, dated March 24, 1987. (Physically filed and designated in Form 10-K for the fiscal year 1987, File No. 1-3553, as Exhibit 3-A.) Articles of Amendment of the Amended Articles of Incorporation of SIGECO, dated November 27, 1992. (Physically filed and designated in Form 10-K for the fiscal year 1992, File No. 1-3553, as Exhibit 3-A.) A-2** Articles of Incorporation of Spencer, as filed with the Secretary of State, State of Indiana. A-3** Articles of Incorporation of Lincoln, as filed with the Secretary of State, State of Indiana. B-1** Letter of Intent dated November 19, 1993. B-2** Agreement and Plan of Merger, dated as of December 23, 1993. B-3** Right of First Refusal Agreement, dated December 23, 1993. B-4** Indemnity Agreement, dated as of December 23, 1993. B-5** Letter Agreement, dated as of December 23, 1993, regarding certain employee matters. B-6** Names and shareholdings of stockholders of Lincoln holding 1% or more of Lincoln Common Stock. D-1** Joint Petition of SIGECO and Lincoln to the Indiana Utility Regulatory Commission. D-2 Order of Indiana Utility Regulatory Commission. E** Map showing geographical relationship of properties of SIGECO and Lincoln. (Filed in paper form under Form SE pursuant to Instruction E to Form U-1 Instructions to Exhibits.) F Opinion of counsel to SIGECO. H** Proposed Notice of Application. * Incorporated by reference. ** Previously filed with original Application. (b) Financial Statements 1.** Southern Indiana Gas and Electric Company Pro Forma Combined Condensed Balance Sheet of as of December 31, 1993 and Pro Forma Combined Condensed Statement of Income as of December 31, 1993, with summary of pro forma adjustments. 2.** Lincoln Natural Gas Company, Inc. financial statements for the year ended December 31, 1993. 3.** Lincoln Natural Gas Company, Inc. financial statements for the years ended December 31, 1992 and 1991. 4. Lincoln Natural Gas Company, Inc., Statement of Projected Income, and Projected Balance Sheet, May 31, 1994 to December 31, 1994 and Statement of Projected Cash Flows, June 1, 1994 to December 31, 1994. ** Previously filed with original Application. SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned, as Applicant, has duly caused this amendment to be signed on its behalf by the undersigned thereunto duly authorized. Date: June 17, 1994 SOUTHERN INDIANA GAS AND ELECTRIC COMPANY By: /s/ A.E. GOEBEL --------------------------- A.E. Goebel Senior Vice President, Chief Financial Officer, Secretary and Treasurer EX-1 2 EXHIBIT D-2 STATE OF INDIANA INDIANA UTILITY REGULATORY COMMISSION JOINT PETITION OF SOUTHERN INDIANA GAS ) AND ELECTRIC COMPANY ("SIGECO") AND ) LINCOLN NATURAL GAS COMPANY, INC. ) ("LINCOLN") FOR AUTHORITY TO ) CAUSE NO. 39872 IMPLEMENT A TRANSACTION WHEREBY ) SIGECO'S WHOLLY OWNED SUBSIDIARY ) SPENCER ENERGY CORP. ("SPENCER") ) WILL ACQUIRE THE STOCK OF LINCOLN AND ) MERGE INTO LINCOLN AND FOR ) APPROVED: AUTHORITY FOR NECESSARY FINANCING ) MAY 18, 1994 BY SIGECO THEREFOR AND FOR APPROVAL ) OF THE TRANSACTION ) BY THE COMMISSION: ----------------- Frederick L. Corban, Commissioner Scott R. Jones, Assistant Chief Administrative Law Judge On December 27, 1993, Southern Indiana Gas and Electric Company ("SIGECO" or "Petitioner"), and Lincoln Natural Gas Company, Inc. ("Lincoln" or Petitioner"), both companies jointly referred to as "Joint Petitioners", filed their Petition with the Indiana Utility Regulatory Commission ("Commission") for an order approving a transaction (the "Transaction") whereby SIGECO's wholly owned subsidiary Spencer Energy Corp. ("Spencer") will acquire all Lincoln stock and merge into Lincoln thereby accomplishing the acquisition of Lincoln by SIGECO. SIGECO also seeks Commission authority for the necessary financing for the transaction. A Prehearing Conference was held pursuant to legal notice on January 27, 1994, and a resultant Prehearing Conference Order was issued by the Commission in this Cause on February 9, 1994. The parties have complied with the Prehearing Conference Order except for an agreed minute extension of time for the filing of evidence by the Office of the Utility Consumer Counselor ("UCC"). A public hearing was held in this Cause on April 5, 1994, at 1:30 p.m., EST, in Room TC10, Indiana Government Center South, 302 West Washington Street, Indianapolis, Indiana, pursuant to the Prehearing Conference Order and proper legal notice published as required by law. SIGECO and the UCC appeared and actively participated. Lincoln did not appear but indicated that it is in agreement with SIGECO that the relief requested in the Joint Petition should be granted so that the transaction can be consummated pursuant to Commission approval and authority. Based upon applicable law, the evidence herein and being duly advised in the premises, the Commission now finds: 1. Commission Jurisdiction. The Joint Petitioners are both public utilities as defined in the Indiana Public Service Commission Act, as amended. Proper notice was given of the petition filing, prehearing conference, and the evidentiary hearing as required by law. I.C. 8-1-2-6; 12; 14; 23; 48; 49; 78; 79; 80; 83; 84 and other related statutes are applicable. Therefore, the Commission has jurisdiction over the subject matter and the Joint Petitioners in this Cause. 2. Joint Petitioner SIGECO's Characteristics. SIGECO is an Indiana public utility corporation that provides both gas and electric utility service to the public. This proceeding primarily involves its gas operations and business in which it provides sales and service to more than 100,000 gas customers located in eight counties in southwestern Indiana. Its principal offices are in Evansville, Indiana, and it operates under indeterminate permits and certificates of public convenience and necessity duly acquired by it. It owns, operates, maintains and manages plant, property, equipment and facilities used and useful for the acquisition, transmission, transportation, storage, distribution, sale and service of gas to the public. Its primary interstate pipeline provider of pipeline service is Texas Gas Transmission Company ("TGT"), but it presently has interconnections with three other interstate pipelines. 3. Joint Petitioner Lincoln's Characteristics. Lincoln is a closely held Indiana corporation that provides gas utility sales and service to approximately 1,300 customers located in Spencer County, Indiana. Its offices are located in Rockport, Indiana, and most of its customers are residential. It operates under indeterminate permits and certificates of public convenience and necessity, duly acquired by it. Lincoln owns, operates, maintains and manages plant, property, equipment and facilities used and useful for the acquisition, transmission, transportation, distribution, sale and service of natural gas to the public. Its interstate pipeline provider of pipeline services is a subsidiary of American Natural Resources Corporation ("ANR"). 4. Characteristics of Spencer: Spencer is an Indiana corporation wholly owned by SIGECO. Through its acquisition of all of the corporate stock of Lincoln as provided for in the Agreement and Plan of Merger ("the Agreement") Among SIGECO, Lincoln and Spencer (Supplemental Exhibit C to the Petition), Spencer will become the sole owner of Lincoln and will then merge into Lincoln to cause Lincoln to continue to exist and operate as a wholly owned subsidiary of SIGECO. Resolutions of each of the Joint Petitioners' Boards approving the Agreement and transaction have been placed into evidence as Supplemental Exhibits A and B to the Petition. Subsequent to issuance of this order approving and authorizing the transaction and required financing, the stockholders of Lincoln and the sole stockholder (SIGECO) of Spencer shall vote on the transaction. If the vote is favorable, as expected, then the transaction will proceed and be consummated, with Lincoln continuing to be subject to the jurisdiction of the Commission, but as a wholly owned subsidiary of SIGECO. 5. Relief Sought: The Joint Petitioners seek Commission approval of authority for the entire transaction provided for in their Agreement (Supplemental Petitioners' Exhibit C) including, but not limited to, the issuance by SIGECO of its common stock necessary to carry out the acquisition by its subsidiary Spencer of all the stock and ownership rights of Lincoln and the subsequent merger of Spencer into Lincoln. SIGECO also seeks authority for the financing and accounting necessary to accomplish and conclude the transaction. 6. Nature of the Transaction. Generally stated, the transaction as contained in the Agreement dated December 23, 1993, provides that SIGECO's subsidiary Spencer will acquire, by a "stock swap", all the common stock of Lincoln. Spencer will then merge into Lincoln so that Spencer will cease to exist but Lincoln will continue to exist and operate as a wholly owned subsidiary of SIGECO. The price to be paid by SIGECO is approximately One Million Three Hundred and Thirty Thousand Dollars ($1,330,000) represented by an appropriate number of shares of SIGECO's common stock to be exchanged for all the common stock of Lincoln. The transaction will take place subsequent to issuance of this Order and after all the shareholders of Spencer and the necessary majority of shareholders of Lincoln have voted in favor of the transaction. The evidence presented is, that the price to be paid by SIGECO through its subsidiary Spencer for Lincoln is a fair and reasonable price resulting from arm's length negotiations between the parties to the Agreement. 7. Commission Discussion and Findings. Commission approval of the Agreement and transaction is in the best interest of the parties to the Agreement, their shareholders and ratepayers. It is also in the public interest based upon our analysis that the acquisition by SIGECO of Lincoln will enhance the position of both companies in the newly restructured natural gas business. SIGECO has approximately 100,000 gas customers which is a relatively small number when compared with other major gas utilities both nationally and within Indiana. SIGECO argues that in the restructured gas industry, it is increasingly important for a local distribution company such as SIGECO to manage its procurement of gas supplies and pipeline transportation and that, good business sense justifies reasonable size enhancements so the cost and risk of gas supply procurement and transportation can be spread over a larger customer base. Not only does the eventual addition of 1,300 customers to the number of customers for whom SIGECO will be responsible, help to create a critical mass for SIGECO helpful to gas business economics and competitiveness, but it also aids Lincoln by making it and its customers a part of much larger gas operations. Additionally, SIGECO will have direct access to an additional interstate pipeline connection - i.e. - ANR. These interstate pipeline connections accommodate access to numerous gas production and marketing areas thereby increasing the likelihood of acquisition of competitively priced gas supplies. The Lincoln gas service territory is contiguous to SIGECO's gas service territory and, pursuant to the prefiled testimony of UCC staff witness Tina M. Osberg, SIGECO has agreed to undertake a study as to the reasonableness, desirability and feasibility of interconnecting the systems of Lincoln and SIGECO. If the study results find that connection of the two systems is reasonable and desirable, then Lincoln will have direct access to three additional interstate pipeline connections - i.e. - TGT, Texas Eastern and Tennessee, through Midwest. That study is to be completed, and a report is to be filed by SIGECO with the Commission and the UCC, within one year of the date of issuance of this Order. SIGECO stated that Lincoln will, for the immediately foreseeable future, continue to operate as a separate and virtually independent utility, but it anticipates that after an extended period of familiarization between the two utilities, there may be favorable opportunities for consolidation of some activities and operation. SIGECO represents that it will take advantage of such opportunities that are mutually beneficial to the utilities and their customers. The spreading of certain costs over a larger number of customers will also permit greater efficiencies and eventually should result in costs and rates, per customer, being lower then they would have been absent the acquisition of Lincoln by SIGECO. The evidence establishes that the transaction will be accounted for by SIGECO under the "pooling-of-interest" method of accounting. As such, there will be no acquisition premium to be recorded or amortized. Joint Petitioners' evidence indicates the consideration to be paid resulted from time-consuming negotiations that occurred intermittently over an extended period. Further, the price is substantially less than 5% of the book cost to SIGECO of its properties, plant and business. Therefore, under I.C. 8-1-2- 84, SIGECO may acquire Lincoln pursuant to the Agreement without obtaining approval and consent from its voting stockholders. Finally, the UCC has no objection to the granting of the requested relief. We find because the acquisition is a relatively small one for SIGECO given the size of Lincoln, approval of the transaction should have no significant impact upon SIGECO's finances, operations or ability to serve the public. Based on all of the above and the record evidence, the Commission finds that the Agreement and the transaction proposed therein is in the public interest and should be approved. The consideration provided for in the Agreement is not unreasonable and SIGECO's payment thereof results in no rate impact. Thus, we find the Joint Petitioners should be authorized to conclude the transaction subject to a favorable vote of the shareholders of Spencer and Lincoln. SIGECO also seeks Commission approval and authority for financing necessary to complete the transaction. This includes authority for issuance of approximately 45,000 to 50,000 additional shares of SIGECO common stock. The exact number of shares to be issued will be determined pursuant to the formula contained in the Agreement. That formula provides that SIGECO will transfer shares to Lincoln having a market value equal to the number of Lincoln customers multiplied by $1,000.00. Therefore, the total number of shares needed will depend on the number of Lincoln customers and the market value of SIGECO stock on or near the date of closing of the transaction, as provided for in the Agreement. The number of shares required is not expected to exceed 50,000. SIGECO has about 15,700,000 shares of stock outstanding, so there would be 15,750,000 shares outstanding after completion of the transaction if 50,000 shares were used. Therefore, the increase in common equity is less than 0.5% and presents no significant concern. The undisputed testimony of SIGECO witness A. E. Goebel is that the requested financing will have no substantial adverse impact on any of the involved utilities. The transaction will be accounted for as a "pooling of interest" with no goodwill or acquisition premium recorded. On a consolidated basis, for financial reporting purposes, the transaction will result in the assets and liabilities of SIGECO and Lincoln being added together, with the equity account reflecting the increased shares of SIGECO common stock outstanding. The UCC does not oppose the proposed financing and accounting. The Commission finds that SIGECO's requested financing, and the accounting therefor, necessary to implement the transaction should be authorized and approved. The specific ultimate accounting entries should be: Debit: Investment in common stock of Lincoln Natural Gas Co., Inc. $500,000 (Approximately - dependent on the formula at effective date of transaction) Credit: Common Stock ( S a m e conditional amount) In conclusion, the Commission finds that the entire transaction whereby SIGECO would acquire, own and operate Lincoln as a separate subsidiary, and the financing by SIGECO to implement the transaction, are in the public interest and should be approved. IT IS THEREFORE ORDERED BY THE INDIANA UTILITY REGULATORY COMMISSION that: 1. The Agreement and the entire transaction presented and proposed by the Joint Petitioners are accepted and approved, and the Joint Petitioners are jointly and separately authorized to execute - SIGECO in its own name or through its subsidiary Spencer - any agreements and documents necessary to accomplish and conclude the entire transaction as approved herein. SIGECO, Lincoln and Spencer are further jointly and separately authorized to do all things reasonably necessary to implement and conclude the transaction. 2. SIGECO is hereby authorized and empowered to own Lincoln and all of its permits, certificates, rights, assets and entirety and to operate Lincoln as its wholly owned subsidiary. 3. The gas rates presently on file with and approved by the Commission for SIGECO and for Lincoln shall remain in effect until further proceedings are implemented and appropriate order is issued thereon by the Commission. 4. SIGECO shall undertake a study of the reasonableness, desirability and feasibility of interconnecting the systems of SIGECO and Lincoln. A report thereon shall be filed by SIGECO with the Commission and the UCC within one year of the date hereof. 5. Commission approval and authorization is hereby granted empowering SIGECO to conduct and enter into all financial arrangements necessary to implement and consummate the Agreement and the transaction hereby approved; provided that SIGECO is limited to the issuance of up to 50,000 shares of new common stock which shares shall be used as consideration pursuant to the formula contained in the Agreement. SIGECO shall also file a written report with the Commission describing and detailing the financing and amount of common stock issued and used to complete the transaction; such report to be filed within thirty (30) days of consummation of the transaction. 6. The accounting treatment proposed by SIGECO and set forth in Finding No. 7 herein is approved. 7. SIGECO's property is pledged and encumbered under a certain Indenture of Mortgage and Deed of Trust between SIGECO and Bankers Trust Company, as Trustee, dated as of April 1, 1932, and the Commission approves the inclusion of all assets acquired in the transaction by SIGECO so that they are included within and subject to that Indenture and Deed of Trust as of the date of consummation of the transaction. 8. This Order shall be effective on and after the date of its approval. MORTELL, CORBAN, KLEIN AND ZIEGNER CONCUR; HUFFMAN ABSENT: ---------------------------------------------------------- APPROVED: I hereby certify that the above is a true and correct copy of the Order approved. /s/ RUTH ANN TOWNSEND Ruth Ann Townsend, Secretary to the Commission and Executive Director EX-2 3 EXHIBIT F Bamberger, Foreman, Oswald and Hahn 7th Floor Hulman Building P.O. Box 657 Evansville, Indiana 47704 Telephone: (812) 425-1591 Fax: (812) 421-4936 June 13, 1994 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Ladies and Gentlemen: We have acted as Indiana counsel for Southern Indiana Gas and Electric Company (the "Company") in connection with its proposed acquisition of all of the issued and outstanding shares of common stock, par value $10 per share ("Lincoln Common Stock"), of Lincoln Natural Gas Company, Inc. ("Lincoln"), an Indiana public utility corporation engaged in the gas utility business. A wholly-owned subsidiary of the Company, Spencer Energy Corp., an Indiana corporation ("Spencer"), will be merged (the "Merger") with and into Lincoln pursuant to an Agreement and Plan of Merger, dated December 23, 1993, among the Company, Spencer and Lincoln (the "Agreement"), with Spencer ceasing to exist and Lincoln continuing as the surviving corporation. In the Merger, the holders of Lincoln Common Stock issued and outstanding immediately prior to the Merger would be entitled to receive shares of common stock, without par value, of the Company ("SIGECO Common Stock") in accordance with the Agreement, and each share of common stock, no par value ("Spencer Common Stock"), of Spencer issued and outstanding immediately prior to the Merger would be converted into one share of Lincoln Common Stock. The number of shares of SIGECO Common Stock to be exchanged in the transactions will be determined by their average closing market price over a five-day period before the relevant closing date. The transaction is intended to result in the liquidation of Spencer and the survival of Lincoln as a wholly- owned subsidiary of the Company. The Company has filed an Application/Declaration on Form U-1 (the "Application") with you under the Public Utility Holding Company Act of 1935, as amended, in connection with the foregoing proposed transactions. We are members of the Bar of the State of Indiana and we do not express any opinion herein concerning any law other than the law of the State of Indiana. We have examined and relied upon originals or certified copies or copies otherwise identified to our satisfaction of such documents, corporate records and other instruments as we have deemed necessary or appropriate as a basis for the opinions hereinafter expressed, including the order of the Indiana Utility Regulatory Commission approving the Merger (the "Order"). In our examination, we have assumed the genuineness of all signatures, the authenticity of all documents and other material submitted to us as originals and the conformity with the originals thereof of all documents and other materials submitted to us as copies. As to various questions of fact material to this opinion, we have, to the extent that relevant facts were not independently established by us, relied upon certificates of public officials, certificates and representations of officers or other representatives of the Company contained in the Agreement, and the information set forth in the Application. Based on the foregoing, we are of the opinion that: 1. Assuming the proposed transactions are consummated in conformity with the terms of the Order, no other approval or consent of any state or local governmental body, regulatory body or administrative authority, will be legally required for the consummation of the proposed transactions and all laws of the State of Indiana applicable to the proposed transactions will have been complied with. 2. The Company and Lincoln are duly organized and validly existing corporations under the laws of the State of Indiana. 3. When, as contemplated in the Application, the Company has taken all corporate action necessary and appropriate for the legal and valid issue of the SIGECO Common Stock in accordance with the provisions of the Agreement and in accordance with the Indiana Business Corporation Law, as amended, and certificates for the shares of SIGECO Common Stock have been duly executed on behalf of the Company and delivered as provided in the Agreement, the SIGECO Common Stock will be validly issued, fully paid and non-assessable, and the holders thereof will be entitled to the rights and privileges appertaining thereto set forth in the Company's Amended Articles of Incorporation, as amended. 4. Assuming all necessary legal and corporate action has been taken by the Company and Lincoln and that the proposed transactions are consummated in accordance with and as contemplated in the Agreement and the Application, the Company will have legally acquired validly issued, fully paid and non- assessable Lincoln Common Stock and will be entitled to the rights and privileges appertaining thereto set forth in Lincoln's Articles of Incorporation, as amended. 5. Assuming all necessary legal and corporate action has been taken by the Company, the consummation of the proposed transactions in accordance with and as contemplated in the Agreement and the Application will not violate the legal rights of the holders of any securities issued by the Company or any associate company thereof. This opinion is being delivered to you pursuant to the Application. We hereby consent to the use of this opinion as Exhibit F to the Application. Very truly yours, BAMBERGER, FOREMAN, OSWALD AND HAHN /s/ ROBERT M. BECKER Robert M. Becker EX-3 4
LINCOLN NATURAL GAS COMPANY, INC. STATEMENT OF PROJECTED INCOME MAY 31, 1994 TO DECEMBER 31, 1994 MAY 31,1994 JUNE 30,1994 JULY 31,1994 AUG 31,1994 SEPT 31,1994 OCT 31,1994 NOV 30,1994 DEC 31,1994 Y-T-D Y-T-D PROJECTED PROJECTED PROJECTED PROJECTED PROJECTED PROJECTED PROJECTED PROJECTED ACTUAL REVENUES RESIDENTIAL $ 312,906 $ 12,883 $ 12,232 $ 11,058 $ 12,836 $ 27,946 $ 65,126 $108,251 $563,238 COMMERCIAL 155,463 6,163 6,218 6,145 21,227 21,917 33,098 56,089 306,320 CUST FORFEITS 1,626 350 350 350 350 350 350 350 4,076 CUST INSTALL 2,681 994 994 994 994 994 994 994 9,639 CUST TRANS 51,428 9,897 12,054 12,625 13,407 10,744 12,553 14,407 137,315 GCA ADJUST 20,709 20,709 ------- ------- ------- ------- ------- ------- ------- ------- --------- TOTAL 544,813 30,287 31,848 31,172 48,814 61,951 112,121 180,091 1,041,097 EXPENSES GAS PURCHASES 415,743 14,121 16,604 16,193 26,159 36,881 67,880 112,765 706,346 TRANSMISSION 129 129 DISTRIBUTION 72,064 13,463 16,040 13,463 16,040 13,463 13,463 16,040 174,036 CUSTOMER ACCTS -0- 136 136 136 136 136 136 136 952 SALES PROMO 133 90 90 90 90 90 90 90 763 ADMIN & GENERAL 56,937 9,427 10,295 9,427 10,295 9,427 9,427 10,295 125,530 DEPRECIATION 9,063 1,812 1,812 1,812 1,812 1,812 1,812 1,812 21,747 TAXES 9,296 1,415 1,415 1,415 1,415 1,415 3,611 1,415 21,397 ------- ------- ------- ------- ------- ------- ------- ------- --------- TOTAL 563,365 40,464 46,392 42,536 55,947 63,224 96,419 142,553 1,050,900 INCOME FROM OPERATIONS ( 18,552) ( 10,177) ( 14,544) (11,364) ( 7,133) (1,273) 15,702 37,538 (9,802) OTHER INCOME INTEREST & DIV 2,248 450 450 450 450 450 450 450 5,398 MISCELLANEOUS 167 33 33 33 33 33 33 33 398 ------ ----- ----- ----- ----- ----- ----- ----- ------- TOTAL OTHER 2,415 483 483 483 483 483 483 483 5,796 NET INCOME (16,137) ( 9,694) ( 14,061) (10,881) ( 6,650) ( 709) 16,185 38,021 ( 4,007) RETAINED EARNINGS BEGINNING 391,175 375,038 365,344 351,283 340,402 333,752 332,962 349,147 391,175 RETAINED EARRNINGS ENDING $375,038 $345,344 $351,283 $340,402 $333,752 $332,962 $349,147 $357,168 $387,161 ________ ________ ________ ________ ________ ________ ________ ________ ________ ____________________ Does not reflect the full effect of the Company's most recent rate increase which did not take effect until late March 1994.
LINCOLN NATURAL GAS COMPANY, INC. PROJECTED BALANCE SHEET MAY 31, 1994 TO DECEMBER 31, 1994 MAY 31, 1994 JUNE 30,1994 JULY 31,1994 AUG 30,1994 SEPT 31,1994 OCT 31,1994 NOV 30,1994 DEC 31,1994 Y-T-D ACTUAL PROJECTED PROJECTED PROJECTED PROJECTED PROJECTED PROJECTED PROJECTED ASSETS GAS PROPERTY & SYSTEMS $ 768,156 $ 768,156 $ 768,156 $ 768,156 $ 768,156 $ 768,156 $768,156 $768,156 LESS: ACC DEPR (365,235) (367,047) (368,859) (370,671) (372,483) (374,295) (376,107) (377,919) ------- ------- ------- ------- ------- ------- ------- ------- 402,921 401,109 399,297 397,485 395,673 393,861 392,049 390,237 CURRENT ASSETS CASH ON HAND 1,970 1,970 1,970 1,970 1,970 1,970 1,970 1,970 WORKING FUNDS 3,649 40,447 34,350 23,886 16,602 13,549 16,303 34,300 INVESTMENTS 147,324 147,324 147,324 147,324 147,324 147,324 147,324 147,324 ACCOUNTS REC 50,534 30,287 31,848 31,172 48,814 61,951 112,121 180,091 PREPAYMENTS 10,657 8,872 7,087 5,302 3,517 1,732 -0- -0- OTHER RECEIPTS 16,385 16,385 16,385 16,385 16,385 16,385 16,385 16,385 GAS INVENTORY 35,124 35,124 35,124 35,124 35,124 35,124 35,124 35,124 ------- ------- ------- ------- ------- ------- ------- ------- TOTAL CA 265,643 280,409 274,088 261,163 269,736 278,035 329,227 415,194 668,564 681,518 673,385 658,648 665,409 671,896 721,276 805,431 _______ _______ _______ _______ _______ _______ _______ _______ EQUITY & LIABILITY COMMON STOCK 97,500 97,500 97,500 97,500 97,500 97,500 97,500 97,500 RETAINED EARNINGS 375,038 365,344 351,283 340,402 333,752 332,962 349,147 387,168 REACQUIRED STOCK ( 8,130) ( 8,130) ( 8,130) ( 8,130) ( 8,130) ( 8,130) ( 8,130) ( 8,130) PREMIUM ON STOCK 17,607 17,607 17,607 17,607 17,607 17,607 17,607 17,607 ------- ------- ------- ------- ------- ------- ------- ------- 482,015 472,321 458,260 447,379 440,729 439,939 456,124 494,145 LIABILITIES NOTES PAYABLE 100,095 100,095 100,095 100,095 100,095 100,095 100,095 100,095 ACCOUNTS PAYABLE 17,816 40,464 46,392 42,536 55,947 63,224 96,419 142,553 CUSTOMER DEPOSIT 2,735 2,735 2,735 2,735 2,735 2,735 2,735 2,735 CUSTOMER ADVANCE 16,919 16,919 16,919 16,919 16,919 16,919 16,919 16,919 OTHER ACCT/PAY 49,331 49,331 49,331 49,331 49,331 49,331 49,331 49,331 ACC PRO RATE REF ( 347) ( 347) ( 347) ( 347) ( 347) ( 347) ( 347) ( 347) ------- ------- ------- ------- ------- ------- ------- ------- TOTAL LIAB 186,549 209,197 215,125 211,269 224,680 231,957 265,152 311,286 $ 668,564 $ 681,518 $ 673,385 $ 658,648 $ 665,409 $ 671,896 $ 721,276 $ 805,432 _________ _________ _________ _________ _________ _________ _________ _________
LINCOLN NATURAL GAS COMPANY, INC. STATEMENT OF PROJECTED CASH FLOWS JUNE 1, 1994 TO DECEMBER 31, 1994 JUNE JULY AUG SEPT OCT NOV DEC 1994 1994 1994 1994 1994 1994 1994 ------------- -------------- ------------- ------------ ------------- -------------- -------------- CASH BEGINNING $ 3,649 $ 40,447 $ 34,350 $ 23,886 $ 16,602 $13,54 $16,303 NET (INCREASE) DECREASE A/R 20,247 ( 1,561) 676 (17,642) (13,137) (50,170) (67,970) NET (DECREASE) INCREASE A/P 22,648 5,928 ( 3,856) 13,411 7,277 33,195 46,134 NET INCOME ( 9,694) (14,061) (10,881) ( 6,650) ( 790) 16,185 38,021 DEPRECIATION 1,812 1,812 1,812 1,812 1,812 1,812 1,812 PREPAID INSURANCE 1,785 1,785 1,785 1,785 1,785 1,732 -0- ------------- ------------- ------------- ------------- -------------- ------------- -------------- CASH ENDING $ 40,447 $ 34,350 $ 23,886 $ 16,602 $ 13,549 $16,303 $ 34,300
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